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INCOME TAXES
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income Tax Provision
The components of the income tax expense (benefit) are as follows (in thousands):
 Year Ended December 31,
 202220212020
Current income tax expense (benefit):  
Federal$— $128 $(10,705)
State353 262 372 
Current income tax expense (benefit)353 390 (10,333)
Deferred income tax provision (benefit):
Federal98,772 9,912 (7,495)
State33,894 996 (2,133)
Deferred income tax provision (benefit)132,666 10,908 (9,628)
Income tax expense (benefit)$133,019 $11,298 $(19,961)
A reconciliation of the income tax expense (benefit) to the amounts computed by applying the statutory federal income tax rate to income (loss) from continuing operations before income taxes is shown as follows (in thousands):
 Year Ended December 31,
 202220212020
Federal statutory income tax$(11,538)$17,731 $(8,931)
State income taxes, net365 1,269 (3,551)
Excess tax deductions on non-cash compensation4,117 (9,401)(2,033)
Impact of the Coronavirus Aid, Relief, and Economic Security Act— — (6,104)
Research and experimentation tax credit(2,906)(3,207)(3,800)
Nondeductible executive compensation2,692 3,058 1,778 
Increase (decrease) in valuation allowance139,374 595 2,100 
Uncertain tax positions405 435 458 
Nondeductible meals & entertainment267 239 99 
Other, net243 579 23 
Income tax expense (benefit)$133,019 $11,298 $(19,961)
Deferred Income Taxes
The tax effects of cumulative temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows (in thousands):
 December 31,
 20222021
Deferred tax assets:  
Provision for accrued expenses$3,257 $5,405 
Leasing25,213 27,419 
Net operating loss carryforwards (a)
59,302 66,977 
Capitalized research and experimentation17,843 — 
Non-cash compensation expense30,451 26,756 
Intangible assets10,240 15,222 
Interest30,054 8,036 
Tax credits16,174 15,848 
Other104 1,079 
Total gross deferred tax assets192,638 166,742 
Less: valuation allowance (b)
(145,401)(6,039)
Total deferred tax assets, net of the valuation allowance47,237 160,703 
Deferred tax liabilities:
Leasing(21,445)(24,590)
Property and equipment(6,227)(8,156)
Equity investment(25,756)(25,608)
Other(592)(444)
Total gross deferred tax liabilities(54,020)(58,798)
Net deferred taxes$(6,783)$101,905 
(a)At December 31, 2022, the Company had pre-tax consolidated federal net operating losses (“NOLs”) of $187.9 million. The federal NOLs no longer expire under the new TCJA. The Company's NOLs will be available to offset taxable income subject to the Internal Revenue Code Section 382 annual limitation. In addition, the Company has state NOLs of approximately $517.0 million at December 31, 2022 a portion of which will expire at various times between 2023 and 2042.
(b)The valuation allowance is related to items for which it is “more likely than not” that the tax benefit will not be realized.
Deferred income taxes are presented in the accompanying consolidated balance sheets as follows (in thousands):
 December 31,
 20222021
Deferred income tax assets$— $87,581 
Non-current assets of discontinued operations— 16,589 
Deferred income tax liabilities(6,783)(2,265)
Net deferred taxes$(6,783)$101,905 
Valuation Allowance
A valuation allowance is provided on deferred tax assets if it is determined that it is “more likely than not” that the deferred tax asset will not be realized. As of each reporting date, management considers both positive and negative evidence regarding the likelihood of future realization of the deferred tax assets.
During 2022, the Company recorded tax expense of $139.4 million to establish a full valuation allowance against its net deferred tax assets due to historical cumulative pre-tax losses and continued pre-tax losses. Management regularly reviews the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing taxable temporary differences, and tax planning strategies. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. In determining the amount of the valuation allowance, the Company considered the scheduled reversal of deferred tax liabilities. The Company will maintain a full valuation allowance on net deferred tax assets until there is sufficient evidence to support the reversal of some or all of the allowance. Should there be a change in the valuation allowance in the future, the income tax provision would increase or decrease in the period in which the allowance is changed. At December 31, 2021 and 2020, the Company recorded a partial valuation allowance of $6.0 million and $5.8 million, respectively, primarily related to state net operating losses, which the Company does not expect to be able to utilize prior to expiration.
A reconciliation of the beginning and ending balances of the deferred tax valuation allowance is as follows (in thousands):
 Year Ended December 31,
 202220212020
Balance, beginning of the period$6,039 $5,802 $4,102 
Charges to earnings139,362 237 1,700 
Balance, end of the period$145,401 $6,039 $5,802 
Unrecognized Tax Benefits
A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands):
 Year Ended December 31,
 20222021
Balance, beginning of the period$2,914 $2,613 
Additions based on tax positions of the current period405 435 
Additions (subtractions) based on tax positions of the prior period(37)(134)
Balance, end of the period$3,282 $2,914 
Interest and, if applicable, penalties are recognized related to unrecognized tax benefits in income tax expense. Interest and penalties on unrecognized tax benefits included in income tax expense for each of the years ended December 31, 2022, 2021 and 2020 is not required to be recorded, as there have been no tax attributes included in income tax returns filed to date to require consideration of interest expense.
As of December 31, 2022 and 2021, the accrual for unrecognized tax benefits, including interest, was $3.3 million and $2.9 million, respectively, which would benefit the effective tax rate if recognized.
Tax Audits
LendingTree is subject to audits by federal, state and local authorities in the area of income tax. These audits include questioning the timing and the amount of deductions and the allocation of income among various tax jurisdictions. Income taxes payable include amounts considered sufficient to pay assessments that may result from examination of prior year returns; however, any amounts paid upon resolution of issues raised may differ from the amount provided. Differences between the reserves for tax contingencies and the amounts owed by the Company are recorded in the period they become known. As of December 31, 2022, the Company is subject to a federal income tax examination for the tax years 2014 through 2021. In addition, the Company is subject to state and local tax examinations for the tax years 2017 through 2022.